FEDERAL COURT OF AUSTRALIA
Koonara Management Pty Ltd v Rockliff (No 4) [2020] FCA 1201
File number: NSD 1357 of 2016 Judgment of: GLEESON J Date of judgment: 24 August 2020 Date of publication of reasons: 2 September 2020 Catchwords: COSTS – costs of applications for costs of proceeding – effect of deregistration of a successful party between hearing of the costs application and delivery of the costs judgment on costs orders, and subsequent reinstatement – consideration of appropriate lump-sum costs order Legislation: Corporations Act 2001 (Cth) ss 601AD, 601AH Cases cited: Amcus Pty Limited v Hurst Rentals Pty Limited & Ors [No 2] [2010] NSWSC 239
Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 27 Date of last submissions: 13 July 2020 (Applicant)
26 June 2020, 30 July 2020 (Respondent)Date of hearing: 24 August 2020 Counsel for the Applicants/Cross-Respondents: J Hynes Solicitor for the Applicants/Cross-Respondents: Minter Ellison Counsel for the Respondents/Cross-Claimant: A Avery-Williams (written submissions); the second respondent appeared for the respondents at the interlocutory hearing on 24 August 2020 Solicitor for the Respondents/Cross-Claimant: Rockliff Snelgrove Lawyers ORDERS
NSD 1357 of 2016 BETWEEN: KOONARA MANAGEMENT PTY LTD (ACN 082 883 323)
First Applicant
ROCKY CASTLE FINANCE PTY LTD (ACN 082 858 160)
Second Applicant
AND: STEPHEN JOHN ROCKLIFF
First Respondent
MICHELLE RENEE ROCKLIFF
Second Respondent
AND BETWEEN: STEPHEN JOHN ROCKLIFF
Cross-Claimant
AND: BURKE ROBERT STANLEY RESCHKE (and another named in the Schedule)
First Cross-Respondent
ORDER MADE BY:
GLEESON J
DATE OF ORDER:
24 AUGUST 2020
THE COURT ORDERS THAT:
1.Leave be granted to the applicants and the first cross-respondent to rely on the affidavit of the first cross-respondent sworn 8 July 2020 and the affidavit of Christopher Keane sworn 13 July 2020, and on the written submissions filed on 14 July 2020.
2.Leave be granted to the respondents to rely on the written submissions filed on 29 July 2020.
3.Pursuant to s 601AH(3) of the Corporations Act 2001 (Cth), and to the extent necessary, an order be made validating order 2 made on 23 April 2020.
4.The costs of the costs application payable by the respondents to the first applicant, the second applicant and the third cross-respondent be fixed in the sum of $95,000.00.
5.Otherwise, there be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)GLEESON J:
On 23 April 2020, after hearing argument in October 2019, I made costs orders in this proceeding and ordered the parties to endeavour to agree on an appropriate costs order or orders (preferably a consolidated lump-sum costs order), reflecting the extent of their success or failure on the costs questions determined by the costs orders: Koonara Management…
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- Case
- [2020] FCA 1201
- Decision Date
CaseChat Overview and Summary
The court considered whether the deregistration of one of the parties, RCF, between the hearing of the costs application and the delivery of the costs judgment, should influence the costs orders. Additionally, it examined whether the reinstatement of RCF should have any impact on the final costs determination. The court also assessed the submissions from both sides regarding the appropriate amount of lump-sum costs to be awarded, taking into account various factors such as the proportionality of the costs claimed, the lack of detailed documentation, and the need for a fair and reasonable outcome.
In its reasoning, the court concluded that the intent of the orders was to conclude the proceedings between the involved parties. The court noted that the Rockliffs had argued for a reduction in the costs due to the deregistration of RCF, while Koonara and Mr Reschke proposed a lump-sum costs order. After weighing these arguments, the court decided to fix the costs payable to Koonara and Mr Reschke at $95,000.00. The court did not apply any discount to the costs incurred in relation to counsel's fees and noted that each party should bear its own costs of the argument on the costs of the costs application.
The court's final orders included granting leave to rely on certain affidavits and written submissions, validating a previous order, and fixing the costs payable by the respondents to Koonara, Mr Reschke, and the Rockliffs at $95,000.00.
Orders
Orders of the court
1. Leave be granted to the applicants and the first cross-respondent to rely on the affidavit of the first cross-respondent sworn 8 July 2020 and the affidavit of Christopher Keane sworn 13 July 2020, and on the written submissions filed on 14 July 2020.
2. Leave be granted to the respondents to rely on the written submissions filed on 29 July 2020.
3. Pursuant to s 601AH(3) of the Corporations Act 2001 (Cth), and to the extent necessary, an order be made validating order 2 made on 23 April 2020.
4. The costs of the costs application payable by the respondents to the first applicant, the second applicant and the third cross-respondent be fixed in the sum of $95,000.00.
5. Otherwise, there be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Mr Rockliff’s affidavit annexes company searches of Reschke Vineyards Pty Ltd and Reschke Pty Ltd, disclosing that both companies have been ordered to be wound up.Written submissions about RCF’s deregistration The Rockliffs filed written submissions before RCF’s reinstatement. In those submissions, the Rockliffs noted that, by s 601AD of the Act, when RCF was deregistered, it ceased to exist. The Rockliffs made contentions about the effect of RCF’s deregistration, including that:(1)An order made on 23 April 2020 for the payment of costs by Mr Rockliff to RCF (order 2) should be set aside.(2)The Court should make an additional order that Mr Reschke be jointly and severally liable with Koonara for a costs order made in Ms Rockliff’s favour on 23 April 2020, by reason of Mr Reschke’s apparent breach of the November 2016 undertaking.Submissions about proposed lump-sum costs order The Rockliff parties submitted:(1)As RCF no longer existed, it was unable to claim its costs in respect of the costs application and, on that basis, the costs should be reduced by at least one-third.(2)The amount claimed by Koonara and Mr Reschke is “remarkable”, more than double the Rockliffs’ costs and not proportionate as it is more than 10% of the Reschke parties’ costs of the entire proceedings.(3)The amount claimed was not supported by tax invoices or timesheets and the Rockliffs ought to have an opportunity to review those documents.(4)Any consolidated costs order must carve out the costs incurred by RCF in obtaining order 2, and would need to take into account earlier costs orders which have not been vacated. These matters should be the subject of agreement between the parties once the costs of the costs application have been quantified.(5)The appropriate order is that the Rockliffs pay the costs of Koonara and Mr Reschke of the application heard on 2 October 2019 as assessed. In reply, the Rockliff parties submitted that an appropriate figure to award Koonara and Mr Reschke for the relevant costs is $44,000.00 having regard to the following matters:(1)Entries in the solicitors’ time sheets totalling $5,460.03 do not appear to relate to the costs application.(2)Entries lacking sufficient detail to determine whether they relate to the costs application.(3)The proposed 20% discount for solicitors’ fees is more appropriate to an award of indemnity costs than an award of party/party costs.(4)The barristers’ invoices do not disclose with sufficient clarity whether the work related to the costs application.(5)It is reasonable to apply a discount for duplication because multiple counsel were retained, and for duplication as between counsel and solicitors.(6)The amount should be reduced by one-third because costs claimable by RCF are not recoverable.RESCHKE PARTIES CONTENTIONS The Reschke parties relied on the following affidavits:(1)affidavit of Christopher Keane, solicitor, sworn 13 July 2020; and(2)affidavit of Mr Reschke sworn 8 July 2020. Mr Keane’s affidavit purported to set out the basis for a lump-sum costs order in the amount of $104,997.58 for the costs of the applications listed for hearing on 13 September and 2 October 2019. The hearing on 13 September 2019 was a case management hearing in preparation for the 2 October 2019 hearing.